Business cash flow best practices to prepare for a recession

Times are tough, and may get tougher for the everyday small business owner. Shifting your business to be more recession-resistant can come by adding in product lines that fare well in recessions, or acquiring another business in your vertical that could counter your revenue volatility as well as offer lower internal costs. In addition to making pivots in your business model, consider implementing the following best practices to prepare for entering a downturn:

1. Increase the frequency of your financial forecasting. Get comfortable with a 13-week forecast.
2. Secure cash through presales, financing receivables (invoice factoring) or inventory (asset-based lending aka ABL), traditional debt financing, or equity financing (take on investors).
3. Lower inventory through discounting or scrap sales.
4. Offer new and existing vendors early-pay discounts. Accept credit cards to get paid quicker.
5. Have good business credit? Obtain a Line of Credit now BEFORE you need it and can’t qualify.
6. Lock in long-term contracts.
7. Utilize hedging for foreign currency purchasing/sales.
8. Brick & mortar presence only? Consider adding a virtual storefront. Think Shopify, WooCommerce or even Squarespace.
9. Begin proactive 90-day performance reviews of staff, if you don’t already do so. Proactively cut under-performing staff members rather than wait for layoffs.

Most importantly, work with your internal team, advisors, bankers, and Fractional CFO or COO to navigate the rapidly-changing credit environment and economy. If you need help with any of the above, including obtaining funding, book a free call with me to discuss.